ADB: ADIF operations were tested during pandemic

The Azerbaijan Deposit Insurance Fund (ADIF) and its operations were tested during the pandemic, proving to be effective in paying the outstanding debts of four closed banks, reads a final report by the Asian Development Bank (ADB) on “Improving Governance and Public Sector Efficiency Program (Subprogram 2),” Report informs.

“For instance, one of the visible achievements of the output targets is the recapitalization of the ADIF. Because of these efforts, the financial system was not disrupted in 2020 by the shutting down of four major banks (AGBank, Amrahbank, Atabank and NBCbank) that were among the 15 major largest financial institutions,” the ADB analysts said.

By December 2020, the ADIF paid AZN600 million to nearly 25,000 depositors of these banks.

“With financial and legal arrangements put in place under the program, the government was able to stabilize the financial situation in the country. The government subsidized part of the interest rate on existing bank loans without state guarantees and allocated around $600 million,” the ADB noted.

These funds were allocated to support entrepreneurs who work in sectors affected by the coronavirus. The government subsidized 10 percent of interest expenses on their loans during the year, and 1 billion manats were allocated for this purpose.

“Despite the fall-out from the pandemic, the reforms implemented under the program provided the government with a more assertive and resilient response to the pandemic,” the ADB added.

ADIF started operating on August 13, 2007. According to the decision of the ADIF Board of Trustees, from June 1, 2020, the upper limit of the annual interest rate on guaranteed deposits in national currency is 12%, in foreign currency - 2.5%.

Depositors don’t pay for deposit insurance, insurance premiums are paid by banks.